McClelland Minute - June 9, 2009

Getting in Step

If you want your property to sell this summer, you must get in synch with the reality of the market that exists today, not months ago.  In a sellers’ market, inventory can’t keep pace with demand.  This results in sellers wanting to push prices up as far as they can go and buyers trying to hold the line.  When supply exceeds demand, as is now the case, it is a buyers’ market.  The situation reverses itself, whereby buyers want to force prices down as low as they can and sellers are trying to maintain status quo. 

In either case, there is always a gap between the buyers’ and sellers’ perception of what a property is currently worth.  The Midwest sustained an escalation of residential sale prices over at least a four year period ending in late 2007.  It then went flat, and for the past few months has drifted downwards.  Some sellers still live in those “good old days”, like an old hippy pining for the 60’s.  They just don’t get it, what they paid for their home doesn’t matter; it is what a qualified buyer is willing to pay for it today that counts.

As a Realtor, my job is not only to offer an opinion on what current market value of their property is today, based on appraisal principles, but also to advise them of trend lines and buyer demographics.  It can be a difficult conversation, for if the seller wants to list their house too high, it simply won’t sell and of course, someone needs to be blamed and that would be the Realtor.  If you can’t get a seller to face the realities up front, then it will be only a matter of weeks before they will call demanding to know why their house hasn’t been shown, much less sold.  I would sooner turn these good folks down now, than let them down later. 

When you do get a seller that acknowledges the facts, and positions their asking price ahead of the market, which today means lower than sales of comparable properties, buyers will pay attention and may be motivated to offer before someone else does.  If a seller refuses to price in a way that captures the interest of those buyers who are actively searching, then they are literally “buying their own home back” with the expectation they will be able to get more later.  Maybe they will, but how many months or years from now will that be?

What really can be frustrating is when that initial offer comes in, and 9 times out of 10, below list price, the seller refuses to negotiate.  Every initial offer in a buyers’ market should be treated as if it may be the only offer you will receive.  This doesn’t mean you should accept a low ball, but an earnest attempt to negotiate an acceptable price and terms should be made.  Several times this spring I have had either the seller or the buyer walk away for a couple of days, only to come back with a conciliatory attitude, and ready to re-engage in the bargaining process.  In my personal opinion, if a seller or buyer isn’t willing to negotiate fairly, then he or she wasn’t serious about trading real estate anyway.

Vern McClelland is associate broker with RE/MAX of Lloydminster.  If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the McClelland Group website www.mcclelland.ca

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